Andrew Carnegie, American Philanthropy, and the True Direction of Generosity

He is known simultaneously as one of the ruthless robber barons of the late 19th century and also one of the most philanthropic human beings to ever live. Andrew Carnegie immigrated to America from Scotland in 1848 at the age of 13. He amassed his wealth by building America’s most successful steel mills. Carnegie Hall, Carnegie Mellon University, Carnegie Libraries, the Carnegie Endowment for International Peace, the Carnegie Foundation for the Advancement of Teaching, and the Children’s Television Workshop (Sesame Street) are just a few of his enduring legacies.

In 1901, Carnegie sold U.S. Steel, his company based in Pittsburgh, Pennsylvania, to J.P. Morgan for more than $200 million. A decade later, with initial gifts totaling $125 million ($4 billion in today’s dollars), he started the Carnegie Corporation, a philanthropic trust commissioned to invest his wealth in projects for “the advancement and diffusion of knowledge and understanding.” 

This mission continues today, focusing on democracy, education, and international peace, making annual grants of $160 million or more. Carnegie’s foundation helped launch the era of modern philanthropy and embraced a technical approach to giving that applied strict management principles and often the best of science, technology, and engineering to enhance the condition of humanity.

Alongside all of this good, Carnegie’s life is full of fascinating contradictions, especially his understanding of the origins and uses of material wealth.

Both self-made and fully aware of his dependence upon the contributions of others, Carnegie was a disciple of English philosopher Herbert Spencer, founder of social Darwinism, and the originator of the expression, “survival of the fittest.” According to Spencer, Gilded Age tycoons like Carnegie possessed unique talents of “social self-consciousness” that could benefit the well-being of society through acts of spontaneous cooperation. Drawing on his early Calvinistic background, Carnegie extended Spencer’s thinking to include more intentional acts of financial trusteeship, whereby the ultra-rich commit to the distribution of excess wealth for the public good while living.

Carnegie’s motivation to give was not entirely altruistic; it was also preemptive. He saw it as a means to protect American capitalism’s commitments to private property, accumulation of wealth, and competitive enterprise, which Carnegie believed to be “the highest results of human experience, the soul in which society so far has produced the best fruit.” A true believer in American industry, Carnegie was convinced that good, not evil, “has come to the race from the accumulation of wealth by those who have the ability and energy to produce it.” To cannibalize this system, Carnegie warned in a lecture at Union College in 1905, is like attacking the bees that make the honey.

The Gospel of Wealth

In his TED talk, Israeli historian Yuval Noah Harari observed, “Money … is the most successful story ever invented and told by humans because it is the only story everybody believes.” Of all the ultra-rich the U.S. has produced, maybe no one would agree more than Carnegie.

As Carnegie made the turn in his life from industrialist to philanthropist he began to narrate a theory of wealth, poverty, and charity. His most famous essay, “The Gospel of Wealth,” published in the North American Review in 1889, opens with this declaration:

The problem of our age is the proper administration of wealth, so that the ties of brotherhood may still bind together the rich and poor in harmonious relationship. 

 

Carnegie warns of the dangers the rich face if not appropriately charitable during their lifetimes. “To leave at death what he cannot take away, and place upon others the burden of the work which it was his own duty to perform, is to do nothing worthy.”

When distributing “surplus assets,” Carnegie saw only three choices: give it away to heirs; demarcate it in one’s will to be allocated later for public purposes; or dispense it in one’s lifetime for public wellbeing. Carnegie advocated vigorously for the third option.

With respect to the first alternative, Carnegie felt that transferring excessive wealth to heirs created damage to children and inflamed the vanity of the benefactor. With respect to the second alternative, Carnegie was also doubtful. He had seen too many family members contest wills that directed assets to public purposes. Moreover, he mused in “The Gospel of Wealth,” the “men who leave vast sums in this way … would not have left it at all had they been able to take it with them.”

To discourage the first two options, Carnegie advocated for a nearly 100 percent estate tax. In his thinking, the only true option was to give away one’s surplus while alive, and duty, as outlined in his “Gospel of Wealth” ensued as follows:

To set an example of modest, unostentatious living, shunning display or extravagance; to provide moderately for the legitimate wants of those dependent upon him; and, after doing so, to consider all surplus revenues which come to him simply as trust funds which he is called upon to administer … the man of wealth thus becoming the mere trustee and agent for his poorer brethren.

 

But Carnegie’s rules for asset distribution came with qualifications. 

Not All Giving Is Equal

First, not all giving is equal. In his speaking and writing, Carnegie railed against “indiscriminate almsgiving,” and distinguished between two classes of poor: those who end up destitute at no fault of their own, and those who contribute to their circumstances. To Carnegie, the former are deserving of help; the latter are not, and philanthropy is only to be directed to those who are willing to help themselves. Carnegie believed so strongly in this advice that he even favored no giving over indiscriminate giving. In his paper of 1889, “The Best Fields for Philanthropy,” Carnegie writes: “The miser millionaire who hoards his wealth does less injury to society than the careless millionaire who squanders his unwisely …”

Second. Carnegie had a detailed plan for where and where not to give. In his view, the following institutions deserve our highest attention: universities, free libraries, hospitals, public parks, meeting and concert halls, swimming pools, and church buildings, especially for organs. Organizations directly assisting the poor to meet their physical needs did not make his list.

By asking tough questions about giving, Carnegie affirmed human dignity through personal agency. He understood well that there are times when our efforts to help hurt, especially by propagating unnecessary cycles of dependency. Carnegie called for more responsible philanthropy supporting society’s desired actions and outcomes, and its highest aspirations. 

Carnegie and his Trust also ushered in an era of smarter philanthropy, drawing upon the best thinking across a multitude of disciplines to improve the processes and outcomes of charitable giving. His efforts helped revolutionize the early era of big giving and have been a standard bearer for the past century. Carnegie enjoyed criticizing older forms of altruism and surmised that “Of every thousand dollars spent in so-called charity today, it is probable that $950 is unwisely spent.” We may quibble with his numbers, but because of Carnegie’s enduring legacy charities likely invest more wisely today than they did in the past.

We can also thank Andrew Carnegie for his deep commitment to giving. Although not a profoundly religious man, his pledge to generosity far exceeded the Biblical principle of tithing and has influenced the wealthy and powerful even today. Started by Warren Buffet and Bill and Melinda Gates, The Giving Pledge — an open invitation to billionaires “to give the majority of their wealth to philanthropy either during their lifetimes or in their wills” —  has more than 240 signees.

What does Carnegie’s legacy mean to Christians?

As commendable as Carnegie’s gospel of giving was, it fell short of the biblical gospel in weighty ways. Rather than meeting physical and material needs, Carnegie was drawn to projects that provided a ladder by which humans could take upward steps of self-improvement. It is important to note that this is not the primary model of giving we see in Scripture. Gleaning laws, for example, indicate otherwise.

When you reap the harvest of your land, you shall not reap to the very edges of your field or gather the gleanings of your harvest. You shall not strip your vineyard bare or gather the fallen grapes of your vineyard; you shall leave them for the poor and the alien: I am the LORD your God. (Lev 19:9–10)

 

Almsgiving, even indiscriminate forms, are reinforced throughout Scripture. “Whoever is kind to the poor lends to the LORD (Prov 19:17; see also Ps 112:5, 9; Matt 5:42; 1 John 3:17). Moreover, when describing the eternal destiny of human beings at his second coming, Jesus did not mince words. He contrasted the “sheep” (those who inherit the kingdom) with the “goats” (those who do not). The former group feed the hungry, give drink to the thirsty, welcome the stranger, clothe the naked, care for the sick, and visit the imprisoned. When they carry out these acts of compassion for “the least of these,” we are told, they do it for Jesus himself (see Matt 25:31–46). Kingdom generosity exceeds scientific philanthropy. We are called to help in both planned and spontaneous ways. The universe of our generosity is boundless, not limited to those committed to helping themselves.

Additionally, our lives do not unfold in distinct epochs, as Carnegie suggested. The philanthropist had a blueprint for life, which he called the “Andrew Carnegie Dictum,” whereby you spend the first third of life getting all the education you can, the next third making all the money you can, and the final third giving away as much as you can for worthy causes. Giving, earning, and preparing are more inextricably linked throughout life, the rhythm of which more closely mirrors biblical vocation. The Carnegie Dictum may be helpful for some, but it is not prescriptive for all.

Finally, generosity is more than philanthropy. Carnegie biographer, David Nasaw, recounting the tycoon’s reputation for exploitative business, observes: “Carnegie’s commitment to giving away his fortune did not make him a more philanthropic employer. On the contrary, he became, if anything, more ruthless in pursuit of profits once he had determined that those profits would be distributed during his lifetime.” If we gain our wealth at the expense of others then we have gained nothing at all. The ends do not justify the means, a principle more easily applied by Carnegie in his philanthropic endeavors than in his business practices.

In the end, Carnegie radically changed the world of philanthropy and is to be lauded for his vast legacy of generosity. But in another respect, he fell short of reformulating Yuval Noah Harari’s hypothesis that the most efficacious story in the world is that of money. Carnegie told a good story about a topic widely known, but it is not the story that is most alive.